Tesla stock is making 52-week lows on Monday. Here’s where major support for the stock sits.
Interestingly, though, the electric-vehicle leader’s stock is not breaking down alongside the rest of the market — it’s doing so mostly on its own.
Just a few months ago the FAANG group, Microsoft (MSFT) – Get Free Report and just about every other stock was under immense selling pressure. But Apple (AAPL) – Get Free Report and Tesla were holding strong as the relative strength leaders from megacap tech.
While Apple is still holding up to some degree, Tesla stock continues to carve out new 52-week lows.
Chief Executive Elon Musk’s taking on the CEO job of Twitter combined with Tesla stock’s disappointing reactions to both earnings and third-quarter deliveries leaves the stock lacking any bullish momentum.
Tesla stock put in back-to-back weekly gains in mid-October, but other than that, it has declined in eight of the past 10 weeks.
Last week it gave investors an inside-week, meaning its weekly trading range was completely contained within the prior week’s range. But with Monday’s 6.5% decline to 52-week lows, we have an inside-and–down weekly rotation.
Today’s decline has me focused on the downside.
The first area of interest is $167.50. We have two notable weekly highs near this level before Tesla stock finally broke out in November 2020.
But for Tesla to be in a position to break out over $167.50, it first had to close above $150, which was a very key breakout area on a daily basis. So that’s the range I’m watching: $150 to $167.50.
In between the two levels are the 200-week and 50-month moving averages and the monthly VWAP measure. Tesla stock should find some support somewhere in this range.
More aggressive traders can buy closer to the $167.50 area and the 200-week moving average, while more conservative bulls can look for an entry closer to $150.
On the upside, I expect resistance in the $200 to $205 zone and from the declining 10-week moving average. For now though, I’m keenly focused on seeing how Tesla stock handles the $150 to $165 area.
If it’s support, long-term bulls and traders alike may find an attractive risk-reward opportunity in this zone. If not, we have a clear line in the sand on when to bail.